4 ms·

The typical founders spend maybe 6 months building a prototype on nights and weekends, then another six months full time without any pay, and then another six m

The typical founders spend maybe 6 months building a prototype on nights and weekends, then another six months full time without any pay, and then another six months at least at minimum wage. And then they usually never get beyond that, and are just out all those hundreds of thousands of dollars they would have otherwise earned. As an early startup employee you might only get 1% as much equity as the founders, but you're also only taking 1% as much risk unless you're working for vastly less than market rates.

ryanSrich 11y ago
Source? Most startup founders pay themselves a market rate salary after funding[1] (even if it's seed). 1. https://docs.google.com/spreadsheet/ccc?key=0AgrWVeoG5divdE81a2wzcHYxV1pacWE1UjM3V0w0MUE&usp=drive_web#gid=1 https://docs.google.com/spreadsheet/ccc?key=0AgrWVeoG5divdE8...
- lmeyerov 11y ago
  Data is the plural of anecdote: "The founders whose companies die usually only earn small salaries. Before being admitted to Y Combinator, founders usually live off savings or taking loans. During the Y Combinator program, they use a one-off seed investment from Y Combinator of US$120,000 to pay living and business expenses15. If they go on to receive angel investment, they can pay themselves about $50,000 per year. With venture capital funding, this tends to increase to about US$100,000 per year" (From the section on "What about the companies that died", namely, the case for most founders.)
mrkurt 11y ago
I think you're vastly overestimating the value of those early days. Valuable startups are built over ~10 years, and people who join early are every bit as important to that success as the founders. Consider what returns seed investors get. Someone who puts $250k on a $5m "valuation" gets 5% of the company. Most founders aren't giving up _that_ much money before hiring employees. Over the 5-10 years it takes a startup to make options valuable, pretty much every early hire (founders included) loses at least $250k in salary differential. Employees are lucky to make that back for middle of the road successes.

ryanSrich 11y ago

Source? Most startup founders pay themselves a market rate salary after funding[1] (even if it's seed). 1. https://docs.google.com/spreadsheet/ccc?key=0AgrWVeoG5divdE81a2wzcHYxV1pacWE1UjM3V0w0MUE&usp=drive_web#gid=1 https://docs.google.com/spreadsheet/ccc?key=0AgrWVeoG5divdE8...

lmeyerov 11y ago
Data is the plural of anecdote: "The founders whose companies die usually only earn small salaries. Before being admitted to Y Combinator, founders usually live off savings or taking loans. During the Y Combinator program, they use a one-off seed investment from Y Combinator of US$120,000 to pay living and business expenses15. If they go on to receive angel investment, they can pay themselves about $50,000 per year. With venture capital funding, this tends to increase to about US$100,000 per year" (From the section on "What about the companies that died", namely, the case for most founders.)

mrkurt 11y ago

I think you're vastly overestimating the value of those early days. Valuable startups are built over ~10 years, and people who join early are every bit as important to that success as the founders. Consider what returns seed investors get. Someone who puts $250k on a $5m "valuation" gets 5% of the company. Most founders aren't giving up _that_ much money before hiring employees. Over the 5-10 years it takes a startup to make options valuable, pretty much every early hire (founders included) loses at least $250k in salary differential. Employees are lucky to make that back for middle of the road successes.